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It may come as a surprising fact that there are now 14 Chinese AI companies valued at $1 billion or more. These unicorns are worth a combined $40.5 billion, according to a report China Money Network recently released during the World Economic Forum's Summer Davos gathering in Beijing.

Just to put these numbers in perspective. Google bought DeepMind for over $500 million in 2014. Chinese voice recognition giant iFlytek Co. has a market capitalization of 63 billion yuan ($9.2 billion). Chinese AI startups raised $27.7 billion via 369 VC deals in 2017, according to a recent report from Tsinghua University.

So naturally, it raises questions on if there is a bubble waiting to pop in the Chinese AI space. How could these companies, with an average age of less than five years, be worth so much money? Especially when most of them do not seem to be even generating any significant revenues.

First, it is worth nothing that for any meaningful discussions on AI, it is necessary to first define how the term AI is calibrated. For this ranking, China Money Network used a narrow definition. It considered only private companies with a core focus on AI technology research and development with their products and services centered on their AI capabilities.

That means public companies like iFlytek and computer vision powerhouse Hikvision are excluded. It also did not include technology giants that utilize AI, such as Alibaba, Tencent, Didi, Toutiao, and every major technology companies.

Second, a look through the list reveals that the majority of these companies appear to have a keen focus on R&D, and still have significant growth ahead of them. They are often backed by top investors including the likes of Temasek, Sequoia Capital and Hillhouse Capital.

Below is a list of the 14 companies and their disclosed or estimated valuation:

Name

Est. Valuation

DJI

$15 billion

Ubtech Robotics

$5 billion

SenseTime

$4.5 billion

Cambricon

$2.5 billion

Cloudwalk

$2 billion

Megvii Technology

$2 billion

Yitu Technology

$2 billion

Horizon Robotics

$1.5 billion

iCarbonX

$1 billion

Mobvoi

$1 billion

Orbbec

$1 billion

Pony.ai

$1 billion

Tongdun

$1 billion

Unisound

$1 billion

Beyond these numbers, read a brief introduction of each company below. They explain why I say there may still be great growth potential ahead for these companies.

Not only are these companies founded by some of the smartest people in China, but also these are the hardest working people in the world. Even though it is debatable if great researchers can naturally be transformed to successful entrepreneurs, these companies' future deserve a certain degree of optimism.

This may not be the case for the general Chinese AI industry, however. The most frequently used words cited to describe the current state of the Chinese AI sector when I interviewed experts and participants include "crazy," "hot" and "expensive."

Many soon foresee a "correction," both in terms of the number of companies and their valuations. That will be beneficial to the industry's long-term prospects, they say.

DJI is known around the world as the dominant consumer drone maker with annual revenue reaching billions of U.S. dollars, but its ambition in AI is no less grand.

Founded in 2006 by Frank Wang, a Hong Kong University of Science and Technology graduate, DJI drove the growth of the consumer drone market, while achieving great commercial success as the top retailer of reliable and economically priced consumer drones.

Much of DJI's technology research areas overlap that of AI and robotics, such as computer vision and sensor technology. DJI's Phantom 4 drone utilizes image recognition to avoid and track objects. The Mavic Pro can be controlled through gesture commands and map the environment based on image recognition and deep learning.

In May 2018, DJI partnered with Microsoft to build an SDK (software development kit) to allow drones stream real-time video to a computer, which enables them to analyze and interpret the footage. This allows for a range of industrial applications such as spotting anomalies in pipes or power lines.

In addition to years of rumors that DJI may be developing its own autonomous driving operations, there are signs that the drone powerhouse is implementing an "All In AI" strategy. Potential areas DJI may enter include advanced manufacturing, robotics and AI chips based on its accumulated technology and know-how in computer vision and AI algorithms.

Founded by a self-taught robot builder long before AI became "hot," Ubtech Robotics' early days were a personal struggle for founder James Zhou. He sold his properties and borrowed money from friends to produce a family humanoid robot Alpha 1S, which had better movements in comparison to other products on the market at the time. That was followed by similar consumer-facing robots, Alpha 1 Pro and Alpha 2. Under a partnership with Apple, Ubtech sells its Jimu Robot, a do-it-yourself STEM-friendly robot for children, at many Apple stores around the world.

Starting in 2017, Ubtech expanded its product line to enterprise-facing robots. It released a cloud-based customer service robot, Cruzr, which is intended to be used in public places, local government offices and schools. More than 2,000 of the Cruzr units will be deployed in retail stores across China this year at the facilities of Ubtech's strategic investor, Beijing Easyhome Furnishing Chain Store Group. And Ubtech soon plans to release a robot security patrol car that can be used to detect intruders.

Ubtech is currently focusing its research on large-scale humanoid robots, as most of its robots are currently small to medium sized. It plans to continue researching humanoid robot drive servo, gait motion control algorithm and computer vision. Another direction it may also pursue is serving as a point of control for smart home devices, perhaps as an alternative to smart speakers. Ultimately, founder Zhou's dream is to produce robots that would allow every family to have a new robot friend.

SenseTime was established in 2014, but its founding team had an early start in AI. While working at a research lab led by Prof. Tang Xiaoou at the Chinese University of Hong Kong, the team began working on deep learning back in 2011. It was among the earliest and most productive research teams, contributing nearly half of the research papers presented from 2011 to 2013 at some of the top conferences on computer vision. It also battled – and occasionally beat - Facebook and Google at global image recognition competitions.

SenseTime also gained experience testing its technology in real-life settings by helping the Hong Kong police to identify the car license plates of suspects seeking to evade capture by using its image recognition capabilities. The company, with four to five people initially, seems to have started business at the optimal time. Within about a year, it had secured dozens of clients, which quickly grew to hundreds in the next twenty months.

Since 2016, SenseTime has quickly become the most high-profile AI company in China by continuously raising massive VC rounds and partnering with top local brands like Xiaomi and Huawei. The company, led by CEO Xu Li, has also partnered with China Mobile to supply its facial recognition technology to the telecom giant's identification system that monitors over 300 million users. Other top sectors SenseTime supplies its technology to include banks, police departments, city governments, airports and retailers.

In the future, SenseTime plans to deepen its research to serve more industries, including autonomous driving and augmented reality. Ultimately, the company has the ambitions to become the next Google and Facebook, but from China.

Cambricon Technologies Corp. was founded in 2016 by a group of researchers at the Institute of Computing Technology, Chinese Academy of Sciences, the country's top research institution. The cofounders are brothers Chen Yunji and Chen Tianshi, who obtained their Ph.D. degrees in computer science and computer theory at the ages of 24 and 25, respectively.

In 2014, the brothers teamed up with other researchers to publish two highly influential research papers on deep learning processor architecture and new designs of an accelerator for large-scale convolutional and deep neural networks. The year after, the team was among the earliest globally to have developed a deep learning dedicated processor prototype chip. In 2016, Cambricon was officially established with angel backing from Chinese voice-recognition giant iFlytek and other Chinese investors. In 2017, the Chinese Academy of Sciences also appropriated 10 million yuan to support Cambricon's research.

Thereafter, Cambricon went on to release a number of key products including Cambricon 1A and 1H series chips specially designed for deep learning processing. The chips were used by smartphone maker Huawei's Mate 10, P20 and Honor phones. In May 2018, Cambricon released the 1M chip and MLU100, its first chip for cloud computing. The 1M chip has TSMC 7nm technology and provides efficiency of 5 TOPS/Watt for 8-bit computing.

As the earliest and most prominent team developing AI chips in China, Cambricon has received strong government support. Its series A and B rounds were both led by Chinese central government-level investment funds. The company is clearly a leader in the Chinese chips space, and carries on its shoulders the hope of achieving China's self-sufficiency in chips.

Cloudwalk

Leading facial recognition solution provider with strong government ties

Founded in: 2015

Founders: Zhou Xi

Headquarters: Guangzhou

Total fundraising: undisclosed

Valuation: approximately $2 billion

Select investors: Shunwei Capital, Oriza Holdings, Puhua Capital

Cloudwalk is another AI startup incubated in the Chinese Academy of Sciences (CAS) system. Founder Zhou Xi is a Ph.D. graduate of the University of Illinois Urbana-Champaign with a research focus on computer vision. He joined the Chongqing research institute of CAS, and then established Cloudwalk in 2015 to turn research ideas into viable businesses.

Cloudwalk began its commercial journey from supplying facial recognition technology solutions to a unit of China's border control. It then helped Guangdong province's public security bureau to catch suspects on the run using facial recognition. As of March 2018, a total of 24 provinces in China utilize public security solutions powered by Cloudwalk. The company also provides facial recognition solutions at airports.

Another area Cloudwalk found viable customers is in banking. With its connection to CAS and the team's early start, Cloudwalk was able to provide facial recognition to nearly 100 large-scale banks in China.

More importantly, Cloudwalk was tasked to help build two projects for China's National Development and Reform Commission: "Artificial Intelligence Infrastructure Public Service Platform" and "Facial Recognition System Industrial Application Platform." The Guangzhou city government has also provided generous financial and policy support to the company, giving it advantages in securing government-related projects.

Cloudwalk Research Institute fuels the company's product development and currently focuses on researching pioneer AI algorithms and exploring new tech areas such as 3D face recognition and Person Re-Identification.

Founded by three classmates at a top computer science class at Tsinghua University in 2011, Megvii is an example of the kind of spark that can be created when talented young researchers meet a disruptive technological revolution at the right time.

Yin Qi, one of the three and now CEO of Megvii, helped develop a facial recognition system while interning and working at Microsoft Research Asia around 2011. The trio saw the business potential of face-recognition technology when Facebook acquired Israeli facial recognition startup face.com in 2012. It prompted Yin to cut short his Ph.D. studies at Columbia University to return to China and focus on developing Megvii, also known as Face++.

As an early research team and startup focused on commercializing facial recognition technology, Megvii now operates one of the largest open platforms providing facial recognition technology, Face++, and identity verification system, FaceID. Its solutions, provided as a Web API, mobile SDK and other tailored formats, are used in financial services, public security, mobile phones and other sectors. Top Chinese firms including Alibaba, Huawei, Lenovo, Foxconn, Xiaomi and CITIC Bank used Megvii's technology, and some became its investors.

Megvii's future ambitious are much bigger. For the short-term, it plans to continue securing the best talent, further expand its data sets, and build more supercomputing centers. It recently acquired Ares robot to enter the robotics sector. It will continue focusing on serving financial services, smart phones and government-facing city AI projects. In the more distant future, the company wants to power computers to "see" everything just like human eyes, and eventually digitalize the physical environment.

Yitu Technology

Earliest and leading computer vision company in public security surveillance

Yitu Technology got its start assisting local police to read fuzzy surveillance video footage to better identify objects like cars and people. As one of the earliest computer vision companies trying to find commercial applications in public security surveillance, Yitu's success is no accident.

Founder Zhu Long, or Leo Zhu, is a statistics Ph.D. graduate from UCLA and conducted postdoctoral research at MIT Artificial Intelligence Lab. Back in 2012 after Yitu was founded, Zhu and his team secured the company's first project by demonstrating satisfying results in correctly identifying vehicles using fake license plates. The company solidified its strength by expanding its work to identifying suspects and lost children, while scaling its operations. In January 2018, Yitu's systems were deployed in over 20 provincial public security bureaus and over 300 cities.

Naturally, Yitu is monetizing its technology elsewhere, such as enabling banks to utilize facial recognition. It is expanding to include medical image, smart retail and smart city projects, which digitize city data such as traffic, energy supply information and infrastructure development to better manage traffic and optimize energy consumption. The company is also exploring opportunities in man-machine interactions, and has invested in a Chinese AI chip startup called ThinkForce.

Internationalization is next up on Yitu's priority list, as domestic competition becomes exponentially more competitive. In January 2018, the company opened its first overseas office in Singapore, with its eyes firmly set on new business opportunities across Southeast Asia. In addition, Yitu continues to deepen research and development of new products and technology.

Horizon Robotics

AI chip and algorithm platform dreaming to power hundreds of millions of smart devices

Founded in: 2015

Founders: Yu Kai

Headquarters: Beijing

Total fundraising: over $100 million

Valuation: over $1.5 billion

Select investors: Hillhouse Capital, Intel Capital, Sequoia Capital

Horizon Robotics was founded by Dr. Yu Kai, founder of Baidu's Institute of Deep Learning, in 2015. With a team of deep learning scientists led by Dr. Yu who previously worked at Siemens Corporation and NEC Labs America, Horizon Robotics secured top investors including Sequoia and Hillhouse at the time of its establishment.

Different from most Chinese AI startups, Horizon Robotics set its eyes on a less traveled and more challenging path: developing an all-encompassing platform combining hardware, software and the cloud to power smart devices that includes everything from autonomous driving vehicles to surveillance cameras.

It took the company almost two years to release its first series of products at the end of 2017: its independently designed and developed AI processor architecture BPU (Brain Processing Unit), and two AI processors, Sunrise 1.0 and Journey 1.0.

Going forward, Horizon Robotics is focused on developing tailor-made and ready-to-use AI hardware and software solutions in a number of key verticals: smart Internet-of-Things, smart city, autonomous driving, and smart retail. With a new office expected to open in Silicon Valley this year, Horizon Robotics hopes to bring an AI capability to more industries and countries.

iCarbonX

The world's fastest unicorn trying to improve personal health via AI

Founded in: 2015

Founders: Wang Jun

Headquarters: Shenzhen

Total fundraising: approximately US$200 million

Valuation: approximately US$1 billion

Select investors: Tencent, China Bridge Capital

iCarbonX holds a world record as the fastest unicorn, achieving its $1 billion valuation six months after it was established. Tencent's investment that gave the company its high valuation at such a young age is a vote of confidence for company founder, Wang Jun. As the former chief executive of Chinese genome sequencing giant, Beijing Genomic Institute (BGI), Wang has big dreams.

iCarbonX was created to achieve a goal much bigger than Wang's previous success at BGI: to let everyone manage their personal health from every aspect that pertains to health. That includes not only genetics, but also immune systems, proteins, metabolism, microbes, exercise, diet, and environment. For that purpose, the company released a mobile app called Meum in January 2017 which users can use to track and manage all of the above health metrics. For instance, Meum will recommend an ideal diet and exercise scheme based on one's health metrics as measured and obtained by physical tests and health data mining.

The vision, because of its all-inclusiveness and complexity, will face many challenges. iCarbonX has been investing in many health verticals to bolster its capacity and expertise. It has purchased stakes in companies providing patient data mining, medical imaging, big data, and even marketing. iCarbonX is also partnering with Chinese agricultural conglomerate COFCO to conduct blood sugar research and applications. In April 2018, it released a customized probiotics dietary supplement food, designed to build a stable and healthy intestinal environment.

iCarbonX will continue to expand its business boundaries, as it inches toward its goal of letting everyone use data mining to control their health.

Mobvoi, which stands for "mobile" and "voice", was among the earliest startups in China to focus on voice recognition technology. Founder Li Zhifei is a Johns Hopkins University graduate and a former Google researcher focused on machine translation and natural language processing. Li started the company in 2012 at the beginning of the mobile internet age with the objective to let people interact with mobile devices using voice command, instead of touch screens.

The idea of initially developing a mobile app quickly turned into producing smart devices from smart watches to smart speakers, as Mobvoi seeks ways to build a more sustainable and tangible business centered around its voice recognition technology.

From 2015 when its first smart device, a smart watch called Ticwatch, was released, Mobvoi's product portfolio now covers smart car rearview mirrors, smart speakers, children's smart speakers, and smart ear buds. In May 2018, the company released an AI chip supporting voice recognition with partner Hangzhou Guoxin Technology.

In the future, Mobvoi aims to continue expanding the user base of its smart devices – from those used at home and in the car - to a critical mass. The company is also exploring applications of its voice recognition technologies for enterprises in the financial services, insurance and property sectors. Its smart car rearview mirror, now operated by a joint venture between Mobvoi and Volkswagen Group China, hopes to add voice interaction capabilities to many more cars in China. The company will also deepen its research and development in tailored AI chip products targeting traditional electronics makers wanting to add voice command to their products.

Orbbec

Popularizing 3D computer vision to more devices

Founded in: 2013

Founders: Huang Yuanhao

Headquarters: Shenzhen

Total fundraising: over $200 million

Valuation: undisclosed

Select investors: Ant Financial, SAIF Partners, Green Pine Capital

Orbbec's founder Huang Yuanhao has been researching ways to help machines see the world better for years. After graduating from Peking University with a major in mechanics, he has focused on photometric biomedical sensors, underwater imaging and imaging through turbid media research at Hong Kong Polytechnic University and MIT. In 2013, he felt the time had finally arrived for machines to see the world as it is: three dimensional.

Orbbec was created to perfect and commercialize 3D computer vision technology. The company currently has a number of 3D camera products designed for different purposes. Some allow more creativity and greater processing power, some are more compatible with existing apps, and some offer compactness to fit small devices. Since 2015, the company has mass produced 3D cameras, which have lower costs and energy consumption because they use the same structured light scheme as the iPhone X.

The company's 3D cameras are used by cashier-free retail stores, robots and smart home manufacturers. Over 2,000 companies are utilizing Orbbec's products to develop numerous products and applications. As 3D imaging becomes more mainstream, Orbbec is planning to expand its market share in China and elsewhere. Some Chinese smartphone makers are potentially using Orbbc's 3D cameras on its future new models. This may just be the beginning.

Andrew Ng called him "one of the world's best hackers." It's really not an exaggeration. Lou Tiancheng has won numerous national computer and math competitions ever since he was 15. Then, he won TopCoder and Google coding challenge championships in China and globally, while still an undergraduate in Tsinghua University. The computer science Ph.D. from Tsinghua, deemed by the Chinese programmer community as "The Godfather" (despite being only 32), later worked at Google and Baidu. It was while at Baidu working on the Chinese search engine's autonomous driving project, Lou got to know the project's chief architect, James Peng. The two joined hands to launch Pony.ai at the end of 2016.

With their top-notch background, investment appeared to come easily from Sequoia and IDG. The founders hired many more staff just like themselves: champions of the International Informatics Olympiad and TopCoder challenges. Half of its staff are Ph.D. degree holders from world-renowned universities.

Pony.ai's ambitions are nothing short of huge. The young startup is eyeing all aspects of the autonomous driving space, from operating systems, tech solutions, hardware, and even making their own cars. It has obtained self-driving road test licenses in California and in Beijing. In Guangzhou, it launched a self-driving fleet for public test driving in a controlled environment. In the next two years, Pony.ai will test its vehicles in a 30 square kilometer area in Guangzhou that will be built especially for self-driving vehicles.

Lou believes that Pony.ai has a great chance of making self-driving a reality soon in China. Part of that confidence comes from how governments in China are embracing innovation and offering support, like those Guangzhou city has offered to his company. Is he overly optimistic? That will have to be answered in time.

Tongdun Technology was started with a mission to provide anti-fraud technology to banks, but it took quite a detour to get there. Founded by Jiang Tao, a former developer at Alibaba and a Fudan University graduate, Tongdun realized it faced a number of challenges convincing banks to trust a small startup. Banks also had a natural mistrust of cloud-based software, and their cycle of implementation took too long.

Jiang was lucky to convince an Asian VP at ThreatMetrix, a U.S. identification authentication services firm, to join him. The company quickly shifted its focus to provide blacklists, and rapidly expanded its blacklists by asking companies to share their own lists. As Chinese P2P industry boomed around 2014, the company found its services suddenly in great demand. P2P lending platforms, microfinance firms, e-commerce firms, social media apps and dating sites all turned to Tongdun, which then combined this enriched data to build more comprehensive risk profiles.

As of early 2018, Tongdun's various APIs including anti-fraud, credit scores and risk management solutions were used over 100 million times daily. As one of the largest third-party anti-fraud services providers, the company now serves banks, insurance and asset management firms, in addition to its more "traditional" clients.

Next, the company has its eyes set on Southeast Asia, where Chinese internet finance firms have been active and the local online banking market is expected to grow significantly.

An early start and unwavering perseverance are key to success. Unisound exemplifies this well. Founder Huang Wei began working as a voice recognition researcher at Motorola Research Center in 2004 after graduating from the University of Science and Technology of China with a major in information and communication engineering. He helped to develop a mobile phone voiceprint authentication system for the leading mobile phone brand. After a stint at China-based Shanda Innovations, where he focused on voice recognition research, Huang founded Unisound in 2012 to test his research and ideas in the real world.

The company decided to carve its own niche in the Internet-of-Things sector, helping home appliance makers to add voice interactions to their products. It initially partnered with domestic TV makers and air conditioner producers to allow users to control the devices with voice commands. Unisound slowly expanded to more crowded sectors including healthcare by helping doctors input medical records using voice commands rather than typing on computers, and the automobiles industry where Unisound enables voice interactions inside the car via devices like rearview mirrors. Other sectors the company has in its sights include voice capabilities for kid-friendly robots, smart speakers, educational devices and legal services.

As a handful of government-backed and strategic investors put capital into Unisound in July 2018, the company appears to be humming along on all cylinders. Two months earlier, it released an AI chip customized for voice applications in the IoT sector, with plans to launch more special use chips in the future. It is also strengthening its super computing platform as it helps to set up and operate AI super computing centers for the Xiamen city government and a unit of Ping An Group. It is leveraging its strong connections to obtain more government businesses in the smart transportation and smart city arena.

With over a decade of experience writing about China, finance and tech in Beijing, Shanghai, New York and Hong Kong, I now track the in-and-outs of Chinese venture

…

With over a decade of experience writing about China, finance and tech in Beijing, Shanghai, New York and Hong Kong, I now track the in-and-outs of Chinese venture capital and tech innovations. As founder of China Money Network, I keep close contact with Chinese VCs, entrepreneurs and tech enthusiasts.
Previously, I worked at Bloomberg BusinessWeek, Euromoney Institutional Investor, China Business Network, and China Radio International.